Senate Passes Investment and Securities Bill 2024 for Third Reading

The Nigerian Senate has passed the Investments and Securities Bill (ISB) 2024, a legislative overhaul designed to modernize and fortify the country’s capital market. The bill, which seeks to repeal the existing 2007 Investments and Securities Act, represents an effort to align Nigeria’s financial regulations with global best practices and create a more attractive environment for both local and international investors.

According to Senator Osita Izunaso, Chairman of the Senate Committee on Capital Market, “This legislation is meant to establish the Securities and Exchange Commission as the apex regulatory authority for the Nigerian Capital Market,” he explained. “It will regulate the market to ensure capital formation, protect investors, maintain a fair, efficient and transparent market, and reduce systemic risk.”

Objectives of the Bill

The bill’s objectives are multifaceted and designed to address contemporary financial challenges. According to the Senate committee’s report, the legislation aims to:

• Protect the integrity of the securities market against all forms of market abuse and insider dealings
• Prevent unauthorized, illegal, fraudulent, and unfair trade practices
• Introduce a regulatory framework for digital currencies and fintech activities
• Support the integration of innovative technologies within the capital market

One of the most significant aspects of the bill is its forward-thinking approach to emerging financial technologies. It contemplates a regulatory framework for digital currencies, including the supervision of blockchain and cryptocurrency transactions, a move that signals Nigeria’s commitment to staying at the forefront of financial innovation.

Cracking Down on Fraudulent Schemes

The legislation introduces stringent measures against fraudulent financial practices, particularly Ponzi and pyramid schemes. The bill mandates harsh penalties for operators, including a minimum fine of N20 million or up to 10 years in prison, or both. This represents a move at protecting investors from illegal fund managers and enhancing market credibility.

Dr. Emomotimi Agama, Director General of the Securities and Exchange Commission (SEC), emphasized the critical nature of these updates. He said, “This bill’s passage would be pivotal in setting Nigeria on the path to a world-class capital market,” he stated, underscoring the role of a robust capital market in economic diversification.

Investor Protection and Market Depth

A notable amendment in the bill expands the scope of the Investor Protection Fund (IPF). Previously limited to cases of bankruptcy or negligence, the fund will now cover investor losses linked to the deregistration of brokerage firms—a significant enhancement of investor safeguards.

The legislation also seeks to introduce and regulate diversified financial instruments, including derivatives, Exchange Traded Funds (ETFs), and other sophisticated products. This approach aims to meet the needs of a broader investor base and increase market depth.

Senate President Godswill Akpabio noted the bill’s potential to attract investment, saying that many would be eager to infuse funds into the capital market when they know risks have been minimized. The bill’s alignment with global dynamics represents a strategic move to boost Nigeria’s international financial standing.

According to Senator Izunaso, “The main objective is to enact legislation that aligns with global dynamics related to capital market regulation through an innovative regulatory framework.”

The Investments and Securities Bill 2024 is more than just a legislative update—it addresses modern financial challenges, protecting investors, and creating a transparent regulatory environment, the bill sets the stage for a more dynamic and competitive financial ecosystem in line with global standards.